PERAC Memo #18 - 2012: Special Counseling for Members Seeking to Withdraw Their Funds

Special Counseling for Members Seeking to Withdraw Their Funds

Summary

This memo addresses the need for retirement boards to counsel members who are considering withdrawing their contributions, given that Chapter 176 significantly changes retirement rights and benefits for anyone who later re-enters public service and becomes a member on or after April 2, 2012 (e.g., higher minimum retirement age, new age factors, five-year salary averaging, new contribution rates, loss of §10 termination allowance). Boards should fully inform any member seeking a withdrawal of these consequences, referencing PERAC Memo #36/2011 for details, before processing the withdrawal.

Full Text

MEMORANDUM #18, 2012 Gregory R. Mennis M E M O R A N D U M TO: All Retirement Boards FROM: Joseph E. Connarton, Executive Director RE: Special Counseling for Members Seeking to Withdraw Their Funds DATE: January 27, 2012 As noted in PERAC Memo #36/2011, several provisions of Chapter 176 of the Acts make significant changes in the retirement laws for those who become members of a Retirement System on or after April 2, 2012. If a member withdraws his or her funds from the Retirement System and later is employed in the public sector and again becomes a member of a Retirement System, the rights and responsibilities in effect when the individual again becomes a member will be applicable. If a member of the System seeks to withdraw his or her contributions, the member should be fully advised that in the event he or she again becomes a member, there will be a number of changes affecting their retirement plan benefits and rights in the retirement system. These most prominently include: The increased minimum retirement age; The new age factors for calculating retirement allowances; The unavailability of the G.L. c. 32, § 10 termination allowance; The applicability of G.L. c. 32, § 105 to elected officials; Five YearAverage Annual Rate of Regular Compensation for calculating allowances rather than a three year average; Proration of benefits earned for service in different Group classifications; New contribution rates; We urge the Boards to review all of the provisions discussed in PERAC Memo #36/2011 with any member considering taking a withdrawal or his or her funds. If you have questions, please contact this office.